Bank Of India vs M/s Aman Hospitality Private Limited

The present petition is filed by Bank of India (“Financial Creditor”/ “FC”), before this Adjudicating Authority on 08.05.2025 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”), r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating the Corporate Insolvency Resolution Process (“CIRP”), declaring moratorium and for appointment of Interim Resolution Professional (“IRP”), against M/s Aman Hospitality Private Limited the Corporate Debtor (“CD”). The relevant details of the proceedings in the case are as follows:

In view of the above factual matrix, it is evident that upon requests made by the parties for completion of their pleadings, this Adjudicating Authority, in the interest of justice, had granted various opportunities to the parties to conclude their respective submissions.

The Bank of India (BOI) is a body corporate having CIN: U99999MH1906PLC000243 (hereinafter referred to as Financial Creditor/FC/Petitioner). Its head office is located at Star House C-5, "G" Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051 and its Branch at New Delhi is situated at Asset Recovery Branch, H-2, Star House, Connaught Circus, New Delhi-110001.

M/s Aman Hospitality Pvt. Ltd., the CD, was incorporated on 20.05.1992 under the Companies Act, 1956, having CIN: U74899DL1992PTC048819. The registered address of the Corporate Debtor is L-4 Green Park Extension, New Delhi, India-110016. Therefore, this Bench has jurisdiction to deal with this petition.

In January 2010, vide sanction letters dated 12.01.2020 (modified on 26.03.2010), the Financial Creditor sanctioned a Term Loan of INR 100 crores to the CD for part-financing the construction of a Five-Star Hotel at Plot No. 1, CBD, Shahdara, Delhi. Pursuant to the above sanction letter, INR 95 crores were disbursed on 26.05.2010, secured by deed of hypothecation. In 2011, the limit was enhanced, and an additional INR 38 Crore was sanctioned by the Financial Creditor.

The loan facility was part of a consortium banking arrangement, and an agreement dated 17.03.2012 was executed amongst the banks inter se in a consortium being led by the Jammu & Kashmir Bank (“J&K Bank”).

The hotel project began to run from 25.12.2012. However, the CD failed to meet its obligations vis. service the debt. To resolve the same, a Master Joint Lenders Forum (JFL) Agreement dated 18.09.2014 was finally executed on 31.03.2015 with the view to explore the possibility of the CD setting right the irregularities/weaknesses in the account. Meanwhile, the Petitioner had sanctioned a Funded Interest Term Loan (FITL) of 26.92 crores vide sanction letter dated 11.12.2014.

On 01.06.2017, an acknowledgement was furnished by the CD with respect to the outstanding debt of the FC amounting to INR 147.89 crores. The Banks in consortium, in July 2017, implemented a Strategic Debt Restructuring (SDR) plan. To execute the SDR, the Lenders agreed to convert their loan into equity. This move was specifically intended to grant the Lenders a controlling interest in the Corporate Debtor, securing them a combined 51% equity shareholding. The FC herein converted its debt of INR 103.32 crores into equity by acquiring the CD’s equity, and its outstanding debt was reduced to INR 44.51 crores. A fresh sanction letter was issued on 15.12.2017. However, the CD still kept on making defaults in payment.

Pursuant to this, on 31.03.2018, the account of the CD was declared as a Non-Performing Asset (NPA), being the date of default in the present case.

The FC issued a recall Notice on 22.05.2020, under Section 13(2) of the SARFAESI Act, 2002, demanding repayment of INR 71.35 crores, which was not replied to by the CD. The FC filed recovery proceedings under Section 19 of the RDDB&FI Act before the Debts Recovery Tribunal-11, New Delhi, bearing OA No. 258/2021, seeking recovery of INR 71.44 crores along with interest. The relevant portion of the notice is extracted below:

Multiple one-time settlement proposals (OTS) were given by the CD vide letter dated 03.09.2018, 28.08.2019, 08.01.2021, 29.12.2022, 24.02.2023, 04.11.2023, 01.01.2024, 15.01.2024 and 25.04.2024, which were either rejected or not accepted for one reason or the other.

Despite repeated OTS discussions, recall notices, and legal proceedings, including DRT action and SARFAESI measures, the CD failed to discharge its liability, and its liability stood at INR 119,00,94,695.68/- (One Hundred Nineteen Crores Ninety-Four Thousand Six Hundred Ninety-Five Rupees and Sixty-Eight Paisa Only) (excluding equity) as on 31.03.2025. Following the same, the financial creditor had filed this present petition under section 7 of the IBC on 08.05.2025. The total amount claimed to be in default is shown in Part-IV of the petition as extracted below:

Advance notice in the petition was issued on 03.05.2025. The petition was listed for the first time on 16.05.2025 wherein the following order was passed:

In compliance with the above order, affidavits were filed by the petitioner on 27.06.2025, and 23.07.2025, placing on record the particulars of default registered with NeSL and authority/approval for initiating CIRP.

The 1^st submission of the Respondent in his reply is that no default has been committed by the CD. The alleged default is not based on any non-payment of instalments but rather on a misinterpretation of the terms of the RBI Circular dated 12.02.2018, which was declared as ultra-vires by the Hon'ble Supreme Court of India in Dharani Sugars and Chemicals Ltd v Union of India and Ors., (2019) 5 SCC 480 on 2nd April, 2019. Accordingly, the SDR scheme was revived, and the reference date became 02.04.2019. Thus, the account of the Corporate Debtor was to remain standstill for a period of 18 months w.e.f. 02.04.2019 i.e. till 01.10.2020, while the default date as alleged in FORM-1 is 31.03.2018, i.e. within the period of 18 months as stipulated under SDR.

In terms of the SDR framework and the applicable restructuring documents, the loan accounts of the Corporate Debtor were required to be maintained as ‘standard’ during the standstill period, during which neither repayment of instalments nor servicing of interest could have been done. Consequently, no demand for payment could have been raised by the Financial Creditor during this period. The alleged date of default as mentioned in Form-1, therefore, is ex facie contrary to the terms governing restructuring. Therefore, no due cause of action can arise as there is no default of the Corporate Debtor during this period in making the payment of any debt.

Further, as per the SDR, the responsibility to find an investor and exit the venture was squarely on the shoulders of the JLF, including the Financial Creditor. The Financial Creditor, having failed to discharge its duties in finding a suitable buyer and exiting the Corporate Debtor, cannot contend that the debt is due or in default. Following the conversion of debt into equity under the SDR scheme, the remaining loan is governed by two key documents: the Supplemental Restructuring Agreement (March 23, 2018) and the Supplemental Joint Master Restructuring Agreement (March 28, 2018). Under these terms, the balance debt only becomes due and payable once the Financial Creditor and other JLF members exit the Corporate Debtor by selling their equity shares to a new promoter.

It is the 2^nd submission of the Respondent that the Corporate Debtor had submitted multiple settlement proposals to the Financial Creditor, offering repayment of the debt and a resolution regarding equity holdings. Despite being aligned with JLF recommendations, the Financial Creditor failed to act on these offers, allowing them to lapse. Under the terms of the aforementioned OTS proposal, the Corporate Debtor offered to settle 100% of the outstanding debt held by all lenders, including the Financial Creditor, without any remission or haircut. Although the Financial Creditor issued an in-principle approval and accepted a 10% upfront deposit, they have stalled the final approval of the OTS and the closure of the account. This delay has paralyzed the Corporate Debtor, leaving the JLF in control of a majority stake since 2018 with no clear exit strategy. This way, the financial creditor itself did not allow the CD to repay the debt and is now filing the present petition for its own default.

In its 3^rd objection, the Respondent submits that the Financial Creditor, being part of the JLF, holding majority stake in the Corporate Debtor, is deemed to be a Corporate Applicant as defined under Section 5(5)(d) of the Code i.e “one who has the control and supervision over the financial affairs of the Respondent. A Corporate Applicant must be approaching the Adjudicating Authority under Section 10 of the Code, and not under Section 7. Hence, this petition under section 7 is not maintainable.

In its 4^th submission, the Respondent submits that the quantum of the debt is disputed. Pursuant to the Sanction Letter dated 15.12.2017, issued for implementation of the SDR Scheme, the Financial Creditor had clearly set out the manner in which recovery of ₹103.32 crores out of the total debt of ₹147.83 crores was to be effected across the three credit facilities. The entire debt under the FITL account was fully recovered, leaving the balance as nil. Despite this, the Financial Creditor has shown an outstanding amount of ₹2.52 crores in the FITL account as of March 2025, which is stated to be contrary to the sanction terms and wholly untenable. Financial Creditor’s claim of INR 2.52 Crores in the FITL (Funded Interest Term Loan) account is fraudulent and should be dismissed, entire debt in the FITL account was recovered and reduced to "Nil" following the implementation of the SDR. The Financial Creditor’s own NESL (National E-Governance Services Ltd) records showed no default or overdue balance in the FITL Ale post conversion of debt into equity. The Respondent also pointed out material inconsistencies between the amounts claimed in Form-1, the figures furnished before NESL, and in the recovery proceedings before DRT, wherein the same debt is already under adjudication. Furthermore, the Financial Creditor has applied non-contractual rate of interest in calculating the purported outstanding only with an intent to extort inflated and illegitimate amounts over and above the actual debt.

Further, it is contended by the CD in the 5^th issue that since it is a solvent entity. Corporate Debtor has offered to pay 100% of debt along with simple interest to the Financial Creditor demonstrating its ability to pay. To show its willingness and readiness the Corporate Debtor has even deposited 10% upfront amount of the proposed OTS with the Financial Creditor but the Financial Creditor has failed to accord its approval to the OTS within the agreed timeline and refunded the upfront amount. Therefore, the present Application is filed not with the motive to provide for resolution of the Corporate Debtor but to use the IBC as recovery tool.

In the last and 6^th issue, the Respondent further submits that in FORM-1, the Financial Creditor has alleged that the date of default is 31.03.2018 i.e. NPA classification date. The present Petition has been filed on 08.05.2025. The three years time period from 31.03.2018 expired on 31.03.2021. However, in view of the Hon'ble Supreme Court's Order dated 27.04.2021 passed in In Re Cognizance for Extension of Limitation, a 90 days extension was available from 01.03.2022. Even with this extension, the present petition was filed well beyond the limitation period and is therefore liable to be rejected. Arguendo, if another default had occurred when the Corporate Debtor did not comply with the demand notice dated 22.05.2020, and did not make any payment within the stipulated timeline of 60 days i.e. by 21.07.2020, the present petition would still not be maintainable. The said date i.e. 21.07.2020 falls within the period exempted under s.10A of the Code, on account of COVID, and no petition can be filed for default of payment during this period.

We have heard Ld. Counsels for the parties, perused documents on record, and recorded our analysis in this factual matrix as below.

Upon perusal of the submissions made by Ld. Counsels, pleadings and documents filed on behalf of both the parties the following Issues have been framed for consideration:

A. Whether there is ‘debt’ and a ‘default’ has occurred within the meaning of Section 7 of the Code and the Application has been filed within the limitation prescribed?

B. Whether the creditors acted arbitrarily in not accepting settlements / OTS offered by the Corporate Debtor?

C. Whether Strategic Debt Restructuring (SDR) Agreement and Conversion of Debt into Equity of the CD (51%) pursuant to the said SDR prevents Applicant Bank from filing Application under Section 7 of the IBC?

D. Whether this Adjudicating Authority can adjudicate upon proprietary / accuracy of amount of debt as alleged by the petitioner and whether CD is a solvent entity?

within the limitation prescribed?

The First and foremost, the issue which needs to be determined is whether the financial creditor has been able to prove the existence of “Financial Debt”. The Financial Creditor has inter alia relied upon the following documents to establish debt and default in terms of section 7 of the IBC:

a. Statement of Account as per Banker’s Book of Evidence Act 1891; and

b. Balance Sheets of the CD as on 31.03.2021, 31.03.2022, and 31.03.2023.

As per the audited financial statement as on 31.03.2023, a total default of INR 44.51 crores is being shown against the petitioner herein. The relevant part of the audited financial statement is extracted hereinbelow:

As against the above, the CD cannot dispute the existence of a financial debt and the default in paying it.

The above default chart admittedly shows the default not only against the Petitioner but also for the other lenders in the consortium. Other banks in the consortium, namely Punjab & Sind Bank and Indian Bank, have also filed a petition under section 7 against the CD in cases bearing CP(IB)-213/2025 and CP(IB)-220/2024, respectively.

It is relevant to mention Section 7 of the IBC here, which provides as follows:

In view of the explanation above, this Adjudicating Authority to take cognizance of the debt and default shown to be admitted by the CD for the petitioner and for the other non-applicant Financial Creditors also. In the present case, admittedly, the default committed is above the threshold limit of INR 1 crore.

It can be seen from Section 7(5) of IBC, 2016, that the Adjudicating Authority has a limited role at the stage of admission of an application filed by a financial creditor. The authority must admit the application under Section 7(5)(a) if it is satisfied that: (i) a default above INR 1 crore has occurred; (ii) the application is complete; and (iii) no disciplinary proceeding is pending against the proposed resolution professional or reject the application under Section 7(5)(b) if satisfied that: (i) default has not occurred; OR (ii) the application is incomplete; OR (iii) disciplinary proceeding is pending against the proposed resolution professional.

The default also stands admitted, as is evident from the audited balance sheet as on 31.03.2023, wherein the Respondent has acknowledged the default in respect of the financial creditors, including the petitioner. The petition is also well within the period of limitation.

So far as the contention of the Respondent that the date of default being 31.03.2018, the date of classification of NPA as mentioned in Form 1 is false for the reasons that the loan accounts were supposed to be maintained standard for a period of 18 months from the date of invocation of the SDR Scheme, is irrelevant in our view. As discussed above the remedy under IBC runs independently from any other restructuring scheme under the law for the time being in force, and in the present case, debt and default are admitted through multiple acknowledgements in Financial Statements. Default under IBC occurs when any outstanding dues above the prescribed threshold of INR I crore have not been paid either wholly or partly, and it is not necessarily linked with the classification of the amount either as standard or NPA. If the outstanding dues exceed INR 1 crore and default thereon has been committed, the right to file an application under Section IBC triggers irrespective of the fact that whether the account has been classified NPA or not. Further, AA has no jurisdiction to decide whether the account classification has been rightly done in accordance with the RBI norms or not. The jurisdiction of this Adjudicating Authority is triggered as there are admitted outstanding dues exceeding INR 1 crore and default thereof.

Even otherwise, it is a settled law that omission to mention the date of default is not fatal, as held by the Hon’ble NCLAT in the matter of Manmohan Singh Jain vs State Bank of India:

Similarly, in the present case also, the record admits debt and default; debt has been acknowledged vide letter dated 01.06.2017, and the account of the CD was classified as NPA on 31.03.2018, followed by multiple OTSs and rejection thereof by the Bank. Admission of debt in balance sheets for each Financial Year, gives rise to fresh date of default.

Further on the issue of contention that an OTS proposal constitutes an acknowledgement of debt for the purpose of limitation. In the present case, multiple OTS proposals have been submitted by the Corporate Debtor dated 03.09.2018, 28.08.2019, 08.01.2021, 29.12.2022, 24.02.2023, 04.11.2023, 01.01.2024, 15.01.2024, and 25.04.2024. It may be relevant to take note of particulars of OTS made.

Relevant portion of OTS dated 03.09.2018 is extracted below:

Relevant portion of OTS dated 28.08.2019 is extracted below:

Relevant portion of OTS dated 08.01.2021 is extracted below:

Further, OTS letter dated 29.12.2022 states as follows:

Further, OTS letter dated 24.02.2023 states as follows:

Relevant portion of OTS dated 25.04.2025 is extracted below:

Moreover, the audited balance sheet as on 31.03.2023, as extracted above clearly records the amount payable by the Corporate Debtor to the petitioner. Accordingly, the objection raised on the ground of limitation is devoid of merit and is liable to be rejected as this petition was filed on 08.05.2025. The same has also been held by the Hon’ble Supreme Court in the case of Vidyasagar Prasad v. UCO Bank & Anr. Civil Appeal No. 1031 of 2022 wherein it has reaffirmed the legal validity of balance sheet entries and OTS proposals as acknowledgments of debt under Section 18 of the Limitation Act. The relevant portion of the judgement is extracted below:

The next contention of the Respondent that the OTS proposal was not accepted by the creditors, does not merit adjudication as it is a settled law now that the Bank cannot be directed to accept a settlement proposal from the Borrower. The bank has to be presumed to have taken the commercial decision prudently and this AA cannot go into proprietary of such decisions vis. a vis. non acceptance of OTS proposal. The Hon’ble Bombay High Court recently on 17.10.2025 in a case before it titled as Ms. Archana Wani vs Indian Bank & Ors. Writ Petition No. 3766 of 2023 observed that loan is granted based on an agreement which is a contract and settlement thereof would amount to rewriting of terms of the original contract. Therefore, it is for the Bank to accept or not accept the settlement proposal which the Bank being the custodian of public money would decide keeping in mind principles of commercial prudence and public interest. The relevant part of the judgment is extracted hereinbelow:

In view of the above, contention of the Respondent that Bank has acted arbitrarily in not accepting OTSs offered by the borrower cannot be accepted, more so when debt and default is clearly admitted.

Issue C: Whether Strategic Debt Restructuring (SDR) Agreement and Conversion of Debt into Equity of the CD (51%) pursuant to the said SDR prevents Applicant Bank from filing Application under Section 7 of the IBC?

On this we are of the view once the debt and default in terms of IBC is there, the right to file applicant under section 7 is independent from any other agreement / ongoing restructuring in any form whatsoever under the RBI Guidelines / norms. The right of the Bank to file an application under section 7 cannot be made dependent upon conclusion of any Strategic Debt Restructuring Agreement. In this context we place reliance upon decision dated 17.07.2017 by Hon’ble Gujarat High court in the matter of Essar Steel India Ltd. v. Reserve Bank of India, Special Civil Application No. 12434 of 2017, operative portion of which is reproduced below:

The acquisition of shares pursuant to debt restructuring scheme does not take away the character of Financial Creditor from the Applicant Bank. The present issue is squarely governed by the issue decided by the Hon’ble NCLAT in the matter of India Power Corporation Ltd. Vs Meenakshi Energy Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 1220 of 2019 wherein the Financial Creditor after invocation of pledge and subsequent transfer of shares in the name of SBI CAP Trustee Company Ltd, held 95.2% of shares in the Corporate Debtor and it was contended that that the dues have been satisfied by the way of transfer of shares and the same was rejected by the Hon’ble NCLAT on the ground that even after transfer of shares admittedly, the Corporate Debtor has sent acknowledgments and proposed settlements, which itself means that there is an admitted debt on part of the Corporate Debtor. The relevant portion of the judgment is extracted hereinbelow:

We find no merit in this argument of the CD. Further, Section 5(5)(d) of the Code defines a “corporate applicant” as a person who has control and supervision over the financial affairs of the corporate debtor. Section 5(5) of the Code is extracted below for perusal:

Mere participation in a Joint Lenders’ Forum or holding a majority share in the debt of the Corporate Debtor does not, by itself, amount to control or supervision over the management or financial affairs of the Corporate Debtor. The Hon’ble NCLAT in the case of Park Energy Pvt Ltd. v. State Bank of India & Anr Comp. App. (AT) (CH) (Ins.) No.62/2023 held the same, and as recorded below:

The management and affairs of the company till date vest with the respondent, and thus, this argument of the respondent is vague, and is not considered by this Adjudicating Authority.

ISSUE D: Whether this Adjudicating Authority can adjudicate upon proprietary / accuracy of amount of debt as alleged by the petitioner and whether CD is a solvent entity?

This Adjudicating Authority is of the view that it is required only to ascertain the existence of a “debt” and a “default” at the stage of admission of a Section 7 petition. Any dispute with regard to the exact quantum of debt is immaterial. The sole consideration is whether the amount in default exceeds the minimum threshold prescribed under Section 4(1) of the IBC.

In Suzlon Synthetics Ltd. v. Stressed Asset Stabilization Company Appeal (AT) (Insolvency) No. 662-663 of 2022 the Hon’ble NCLAT has categorically held that the precise amount of financial debt is irrelevant so long as the amount admitted by the Corporate Debtor exceeds the minimum threshold under Section 4(1) of the IBC. The Hon’ble NCLAT further noted that the scheme of the IBC clearly provides for a separate and detailed mechanism for invitation, submission, verification, and determination of claims by the IRP/RP under Section 25 of the IBC read with the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The determination of the exact quantum of claims is therefore a post-admission exercise and does not form part of the limited jurisdiction of the Adjudicating Authority at the admission stage. The relevant extract of Suzlon Synthetics (supra) is extracted below:

Further, CD has alleged that it is a solvent company and that insolvency proceedings should not be initiated against it. It is observed by this Adjudicating Authority that the object of IBC is to put the CD back on its feet and to rescue it. For such a purpose, what is to be seen is if the CD is not capable of repaying the amount of debt in excess of Rs. 1 Crore in terms of the contract extending the financial facility. The audited balance sheet as on 31.03.2023 also clearly admits the default made by CD in making the payments and thus on its failure to make payments the present petition would be maintainable. The same is clearly laid out by the Hon’ble Supreme Court in the case of M. Suresh Kumar Reddy Vs. Canara Bank & Ors. (2023) ibclaw.in 67 SC] too, wherein, it was held that:

Moving ahead, as per Section 7 of the IBC, the Adjudicating Authority is required to satisfy itself on the following three grounds only while admitting a petition u/s 7 of the Code:

As recorded above in our analysis, these three conditions have been satisfied. Hence, the present petition deserves to be admitted.

Having regard to the conspectus of the present case (as discussed above) we are inclined to ADMIT the present petition bearing No. CP (IB) 276(ND)/2025 filed under Section 7 of IBC, 2016 and pass the following order:

Accordingly, this Adjudicating Authority appoints Mr. Anup Kumar from the panel maintained by IBBI as the Interim Resolution Professional (IRP) of the Corporate Debtor. The proposed IRP is directed to give his written consent in Form 2 as required under rule 9(1) of the Insolvency and Bankruptcy [Application to Adjudicating Authority] Rules, 2016, along with a copy of registration within 3 days of this order. The details of this IRP are provided below:

Name- Mr. Anup Kumar

Registration No. IBBI/IPA-002/IP-N00333/2017-2018/10911

Email Id[email protected]

Address- 734, Lawyers Chamber Block Western Wing Tis Hazari Court, New Delhi, National Capital Territory of Delhi, 110054.

IRP to report compliance within four weeks